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Federal judge upholds jail release of Intelius exec charged with lying to jury in Strip Club Trial

Seattle- from www.seattletimesnwsource.com – For the second time in two days, federal prosecutors on Tuesday failed to convince a judge to keep jailed a Bellevue executive who has been charged with lying to a Seattle grand jury about having sex with a stripper.

U.S. Magistrate Judge Brian Tsuchida denied a motion to reconsider a decision he made Monday releasing John Kenneth Arnold [pictured] from the Federal Detention Center in SeaTac. Arnold, the suspended executive vice president of Intelius Inc., had been arrested last week by FBI agents after he attempted to arrange a rendezvous in Las Vegas with a dancer from Rick’s, the strip club at the center of a federal racketeering investigation.

The attempted rendezvous was a violation of the terms of his pretrial release.

Arnold was indicted in September for lying to a grand jury investigating strip-club owner Frank Colacurcio Sr., who along with his son — Rick’s owner Frank Jr. — and four others was indicted on conspiracy, racketeering, prostitution and money-laundering charges the previous July.

The indictment wasn’t unsealed until Jan. 29, when the U.S. Attorney’s Office in Seattle said Arnold was being prosecuted because his alleged lies to the grand jury about having sex with a stripper were an assault on the foundation of the criminal justice system.

Just hours after Tsuchida ordered Arnold released on Monday — providing he wear a GPS monitor and limit his travel to home, work and church — federal prosecutors sought an emergency hearing to ask the judge to reconsider, claiming that Arnold had misled the court about his employment status at Intelius.

Last week, the company announced internally that Arnold had been placed on indefinite paid leave pending the resolution of the legal woes.

Assistant U.S. Attorney Todd Greenberg argued that neither Arnold nor his attorney made that clear during Monday’s hearing, even though part of it focused specifically on Arnold’s ability to go to and from his job at Intelius and two other small companies he owns. “There is simply a lack of candor on Mr. Arnold’s part,” Greenberg said. “Pretrial release is a matter of trust, your honor, and there should be no more trust in Mr. Arnold.”

But defense attorney Larry Finegold said during Tuesday’s hearing that Greenberg could have settled the matter Monday, “but didn’t have the courtesy, and probably ignored a requirement, to notify me” before going back to the court to seek to have Arnold’s bond revoked. He pointed out that Arnold hasn’t even officially been released from the detention center because the GPS monitor hadn’t been set up yet.

Moreover, Finegold said Arnold had told Pretrial Services when he was initially arrested that he had been suspended from his job. The company’s lawyer has said that, while Arnold isn’t welcome at the offices at this time, “he could be called back at any time,” Finegold said. Meantime, he remains on paid leave.

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